DOJ `Systemically’ Mishandled Sexual Harassment Claims (Audio)

and on Bloomberg dot com slash podcasts. One place you might not expect to find mishandling of sexual harassment complaints is at the Justice Department, which is responsible for the enforcement of law in the country, but the Inspector General says the d o J has systemic problems and how it handles such complaints, and that employees found to have

acted improperly often do not receive the appropriate punishment. According to the Washington Post, Justice Department Inspector General Michael Horowitz sends his findings about the prevalence and mishandling of sexual harassment at the d o J to Deputy Attorney General Rod Rosenstein on May thirty one. The case is examined by the i G included a U S Attorney, a Chief Deputy U. S. Marshall, and SBI Special Agents in Charge, among others. Joining me is Debora Cat's founding partner as Cats,

Marshall and Banks excuse me, Debora. Some of these cases involved senior Justice Department officials across the country, not just senior attorneys, but even a U. S attorney. What's your initial reaction to hearing this, Well, my initial reaction is one of horror, of course, but not surprised. Sexual harassment is endemic in every sector of our workforce, and you know it's it takes place in the judiciary, we know it takes place in Congress, and certainly it's no surprise

that it takes place at Department of Justice. What is really falling to me in reading the Washington Post report is how long UH Rod Rosenstein, Deputy Attorney General Rod Rosenstein, has been sitting on this issue. He received the report from Sector General Michael Horowitz in May detailing extremely agreed to cases of sexual harassment, and more than that that the people who properpetrated the harassment went on to win bonuses and awards with no kind of disciplinary action. That's

just absolutely shocking. And now uh we now know that, uh Lessina saying he's going to convene a task force to look at this. There's something to look at here. We know the laws, they're well established. It's time to take appropriate decisive action. If we really want to your intolerance of sexual harassment, it's times ahead to roll. The cases involved charges of growthing, stalking, peeping at sexual comments, among other things, and at times a perpetrator was transferred

to another division without anything being said. Is that similar to what happens in in corporations and companies across the country. You get transferred and no one knows what happened. Yes, and this is exactly sexual harassment is allowed to uh continue as it has uh where there Uh the individuals whore victimized suffered severe career ramifications. I mean their their their careers are really painted. But the people who are perpetrating harassments just get moved on elsewhere, like we saw

in the priest abuse cases and elsewhere. Um and that Department of Justice has not seen fit even with this Inspector General report, to crack down hard and decisively on these individuals who are fans to have engaged in this

kind of unlawful behavior. To shocking. We're talking eight months that d J has had this Inspector General report and in August UH wasn't seen had received a letter from women in Department of Justice who also detailed that they themselves have been subjected to sexual harassment and that the problems in fact are systemic. And again no action has been taken other than saying we're going to contain a workforce to look at this. That's rights. He so, he

said he's going to convene, he told. The Justice Department spokesman told the Post that rosen Stein had convened a working group to look at the issues raised by the report. Can this be investigated from inside the department or do you need someone outside the department looking in? Well, it's already been investigated. That's the purpose of the Inspector General report. Uh. The issue is that only the Department of Justice can meet at the appropriate discipline. Uh. The IGIEF Office has

already detailed the egregious abuses. Now it's time for the Justice Department to take appropriate disciplinary action. And given the gravity of these offenses, it would be shocking to me if the appropriate discipline wasn't removal. These are high level officials who have significant positions of trust, who are there to enforce our nurstion's laws and are victimizing women. This

is just unacceptable. So the i g S Office said, it published summaries of nineteen substantiate allegations of sexual harassment and miscon duct from through two sixteen. So they're saying that's a small number, but it's the handling of the allegations that the i G found troubling. So expand upon

that a little. Sure, Well, if you have a system where people who come forward with meritorious cases find that the perpetrators suffer no consequences, it sets a tone where other individuals will not risk their careers, will not stick their next up, next out, because they know that doing so will be futile. And if you have a system, a system where meritorious cases like these just get swept under the carpet, you will create an environment where people

don't report. So while Rosenstein said he's hardened by the small number of UH substantiated cases, that's really not the appropriate way to look at it. It's just like saying that there were no there were no complaints actually brought against Harvey Weinstein. If you have a system, an HR system that is ineffective that protects harasses, you're gonna have

people who don't report. And we don't know what the actual number or the actual incidents of sexual harassment is its Department of Justice, because we have a system in place that doesn't punish perpetrators. Well, also, this was before the Weinstein allegations. Those allegations have encouraged women to come forward, so there might be more allegations than we're reported in

the Inspector General's report. Oh, absolutely right. We are at a moment where people are coming forward in record numbers because the presumption now is that victims are telling the truth and that perpetrators are typically recentivious, serial harasses, and

more women are coming forward. But the problem is when you have something like the Department of Justice, which is a large bureaucracy, and people go into believing that filing a claim would be career derailing, they're not going to do it when they see that the harassers suffer no ramification.

So that's why it is crucial that Department of Justice act decisively now if they want other people to come forward, and they have to be a model employer and not allow this kind of very egregious I mean, this is horrible conduct and the fact that no one suffered any consequences is really shocking. And Deborah speaking about the lawyers

that were seen as um sexual harassers. Is there additional Are there additional things that need to be done, for example reporting that to the Office of Professional Responsibility to yes, So that's an excellent point. And also the Inspector General's report noted that some of these maybe criminal offenses. There

could be you know, these faults or criminal offenses. So certainly to the extent that these people are lawyers, the Office of Professional Responsibility within d J should have a role in taking appropriate action, assuming that the individuals remain employed at Department of Justice, and also that these cases should be referred for criminal uh prosecution and what what has been uh confirmed? They're substantiated by the I is assault in a number of these sank. Thank you so much, Deborah.

That's Deborah Cats of Cats, Marshal and Banks. The Trump administration is about rolling back regulations. Remember when President Trump issued the two old rules for one new rule executive order in February. Well, some states are not following suit. New York's top financial watchdog has proposed regulations that would require sellers of life insurance and annuities to act in the best interests of clients, joining states such as Nevada that have raised standards even as the US government delays

its fiduciary rule. Joining me is Robert Hockett, a professor at Cornell Law School. Bob, the Trump administration has delayed implementation of parts of the Department of Labors fiduciary rule that was created during President Barack Obama's presidency. Tell us

about that rule and where it stands? Now? Sure? Yes? So. The idea here is that there are certain products that are sold in the financial markets h that are thought to be so sensitive and so important to the buyers, and at the same time, the transactions and those instruments are thought to be so vulnerability raising or vulnerability causing UH to buyers that some sort of special obligation should be imposed upon the seller to make a point of

ensuring that whatever product is sold to a given client is indeed in the best interest of the client, right uh. And we call that the fiduciary rule. The word fiduciary, of course, comes from the Latin fee day for faith, as in good faith or confidant um. The idea is that, again, we want those who buy these products to be able to trust seller is kind of more like a close friend in selling it to them. Than like an arms

length uh competitive seller in the market where anything goes. Now, that rule was developed um uh in the late in the very sort of last months, you might say, of the Obama administration. It was to go into effect shortly after Mr Trump took office, but his administration immediately delayed implementation of the rule, and ever since then it's been sort of in abeyance. It's been a in a state of limbo um and that's one reason I think the State of New York has decided to move forward with

its own version of the rule. How similar is New York's version to the federal version, It seems to be essentially identical. The real key point here in both cases is that you're you're essentially imposing an obligation or a standard on a seller that's actually quite familiar to our law. It's quite often imposed in the case of say a trustee with in regard to or in relation to the

beneficiaries of the trust. It's uh. It's commonly placed and sort of by operation of law, the managers and the board members of corporations when the interests of the shareholders were at stake. So essentially, what this rule does both at the federal level and here at the New York's eight level, is to sort of import into the matter of life insurance sales and annuity sales, this very familiar

standard that's been with us for centuries. In these other contexts that are where where trust is thought to be especially important. The rule is expected to add to compliance costs for firms and life Insurance Council of New York and industry groups said that any implemented regulation should be uniform across the country, so companies don't face different standards in different states. Is that real concern to you? It's

it's actually a ridiculous claim, um for for two reasons. Right, First of all, the compliance cost claim is ridiculous because of course, anytime you impose any regulation, there's a compliance cost. By definition, right, we make murder very costly by prohibiting it. Right, we make fraud very costly by prohibiting it. A compliance To say that there's a compliance cost is just to say that, you know, of regulation is a regulation that it actually says, it's no longer the case that anything

goes as far as the uniformity matter goes. That's particularly comic call. Because we have a statute a federal stat stood in place, called the mccare and Ferguson Act that actually reserves the regulation of insurance companies to the states. That's to say, we have abjured UH federal regulation of

the insurance industry ever since the mid nineteen forties. If the industry is actually interested in uniformity, it should be calling for a national system or a federal system of insurance regulation instead of opposing that which they have roots kemely done over the last several decades. But how important

is this rule for consumers? It's I think very important for consumers because the problem is that life insurance is like many things, like a bank account, some something that pretty much every ordinary middle class or you know, non actually pretty much every ordinary American needs or or wants, And yet the terms of insurance contracts can be quite complicated and quite difficult for ordinary people to make sense

of UH. And for that reason, it's particularly important that we hold the sellers of that product to a higher standard of behavior, a higher standard of cussworthiness then perhaps, say the sellers of used cars. No, the proposed rules are subject to a sixty day comment period before they're officially issued. Is there anything that seems to stand in

their way. I don't think there is. I mean, the comment period is typically just it's meant to enable those who are thinking you're putting a rule in place, to take account of the various arguments that might be raised for it or against it, essentially to make sure that they don't overlook any important considerations. In one sense, it's the formality, right, It's you basically have to observe that

particular waiting period. On the other hand, it's subsidificus the sense that you know, if people actually make sensible uh comments or recommendations or raised legitimate concerns, it gives the regulators a chance to sort of reformulate the rule or to put in place sort of special safeguards for the implementation of the rule or whatever. New York is simply going through that standard process that's gone through. You know that process has gone through in connection with every regulation.

I don't think there's any specific hold up that's foreseen or expected here. And as far as the fiduciary rule that the Labor Department has or is watching over, is there any likelihood that that will be put into effect? So it's so hard to tell. I mean, the way this administration seems to be operating thus far is just to put things sort of on hold or on the back burner, with no indication at all as to whether or when the thing might be brought back to the

front burner. So it's hard to tell what might happen. Maybe if Mr Trump notices that his poll members are declining among laboring Americans, he'll suddenly play the populist game again as he did during the election season. Uh and and say, okay, let's put that thing to place. If it looks as though he's not suffering any consequences from leaving it in advance, and thereby satisfying his real constituents the industries that would be regulated, then I can imagine

that thing sitting there unfold indefinitely. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on Bloomberg dot com slash podcasts. I'm June Bass. How this is bloombergom or doctor m hm.